Key Questions Answered
Blockchain technology adoption is growing in the enterprise world, with the finance, insurance, and banking industries at the forefront of this growth. A number of private blockchain platforms are actively catering to this lucrative segment of the market.
Two private blockchain platforms that dominate in the finance-related industries at the moment are Corda from R3 and Quorum from ConsenSys. While Corda is the undisputed market leader in finance, insurance, and banking, Quorum has emerged as a serious contender backed by its Ethereum-based functionality.
What Is Quorum?
Quorum is a private blockchain platform that was created as a soft fork from Ethereum (ETH) in 2016 at JP Morgan Chase, one of the largest financial organizations in the world. Retaining much of Ethereum’s useful functionality, Quorum added enterprise-friendly features such as transaction privacy, permissioned access, and higher transaction throughput.
Quorum is an open-source project any developer can contribute to. It is based on one of the original implementations of Ethereum – Go Ethereum. However, companies can create their own protected private networks on Quorum, a feature that is of critical importance to most enterprises.
Being based on Ethereum, Quorum enjoys many of the advantages that come with Ethereum’s popularity and wide adoption. For example, the language used for smart contract development on Quorum is Solidity, the de facto programming language of choice on Ethereum. Since many blockchain developers are already familiar with Solidity, a company implementing Quorum will not have a lack of programming skills to access.
Another advantage that comes from being based on Ethereum is tokenization. Similar to other private blockchains, Quorum lets businesses create their own tokens and coins. The tokens and coins based on Quorum are automatically compatible with Ethereum’s widely used token standards.
How Does Quorum Work?
Quorum’s functionality mimics much of Ethereum’s, but with the following additions/improvements that make Quorum suitable for enterprise use:
- Permission: Quorum users can create permission-based protected networks where only the nodes allowed to participate are part of the network.
- Data privacy: While all transaction data on Ethereum is publicly viewable, Quorum lets you regulate who can access and view data. The data can be made accessible to the public, only to the participating nodes on the private network, or only to a select subset of the participating nodes.
- Higher transaction speed: Most users of Quorum normally achieve a higher average speed of transactions compared to Ethereum, depending on the consensus mechanism chosen, and complexity of the network. While Ethereum manages about 15 transactions per second, Quorum is capable of a few hundred transactions.
Since Quorum allows private networks, which may vary wildly in the number of participating nodes and other technical setup, and offers a high degree of customizability, it is hard to precisely know a Quorum-wide typical transaction speed. Many use cases have reported speeds of around 200 transactions per second.
Who owns Quorum?
Quorum’s current owner, ConsenSys, has built a number of enterprise applications on the platform to help businesses quickly integrate the technology. The applications are mostly geared towards the finance-related industries, the area where Quorum has found the most active use.
Some of the apps relevant for a variety of businesses include:
- Tessera Private Transaction Manager. This app is designed to make private transaction creation and management on Quorum as easy as possible. It is open-source and written in Java, a popular language with a vast developer base, making it easy for businesses to customize and maintain the app.
Given that many companies’ primary reason for implementing private blockchains is data privacy, Tessera PTM is a key app companies will benefit from when implementing Quorum.
- Codefi Payments. This app makes it easy for businesses to create digital payment systems. Companies can issue their own digital tokens and create inter-organizational B2B settlement networks.
Creating a digital payment system from scratch can be a complex programming task. Codefi Payments is an out-of-the-box solution which can be used to create such a system in minutes.
- Codefi Workflow. The Workflow app makes it easy to quickly create and deploy an inter-organizational network with streamlined shared business processes. This is a useful app for companies looking to optimize a complex supply chain, e.g., in the retail sector. Another use case for the app is streamlining complex insurance claims processing.
- Codefi Orchestrate. Creating a fully functional blockchain network, especially involving multiple organizations, can be a highly resource-intensive task. A large team consisting of developers, architects, project managers, blockchain security managers, and other professionals needs to be involved. It can take months or years, and still be prone to functional or security weaknesses.
Codefi Orchestrate is an app that automates development of the core blockchain network components, and can literally cut thousands, if not millions, from the development effort. Using Orchestrate, businesses can quickly set up all the necessary base components of a functional blockchain.
Codefi Orchestrate is a Quorum app that automates blockchain components’ development (Source: ConsenSys.net)
Does Quorum Have a Cryptocurrency?
Similarly to the other major private blockchains, Quorum does not have a platform-wide cryptocurrency. Companies creating their own permissioned networks on Quorum can create their own crypto tokens or coins.
Quorum and JP Morgan Chase
In 2019, JP Morgan Chase, then the owner of Quorum, introduced a coin called JPM to facilitate value transfers between companies using Quorum. JPM is a stablecoin pegged to the US dollar. However, JPM is not available publicly for purchase, and can only be used for B2B transfers by companies who hold USD deposits in JP Morgan bank accounts.
Promotion of the JPM as a cryptocurrency has been heavily criticized by some in the blockchain community due to its restrictive nature. The critics argue that JPM, with its dependence on USD deposits at the bank, does not meet the definition of a cryptocurrency.
Who Is Behind Quorum?
Quorum was developed in 2016 by JP Morgan Chase. The banking behemoth promoted Quorum as the ultimate blockchain solution for the finance industry.
Quorum and ConsenSys
In 2020, JP Morgan Chase sold Quorum to ConsenSys, a technology and investment company specializing in Ethereum-based solutions. Reportedly, JP Morgan made a “strategic investment” in ConsenSys around the time of the deal. The size of the investment has not been publicly disclosed.
What is ConsenSys?
ConsenSys is headquartered in Switzerland and has offices in around 30 countries. The company was founded in 2014 by two technology entrepreneurs – Andrew Keys and Joseph Lubin.
Lubin is no obscure person in the world of blockchain – he is one of the eight co-founders of Ethereum. Lubin is still contributing to the Ethereum project. At ConsenSys, he carries out the CEO role.
The company’s other co-founder, Andrew Keys, left ConsenSys in June 2019 to lead a technology investment company DARMA Capital. Prior to his departure, Keys led the global business development function at ConsenSys.
ConsenSys raised a total of $75 million in Venture Capital (VC) over two funding rounds. In the first round, in June 2019, one of the largest conglomerates of South Korea, SK Group, invested $10 million in the company.
During the second, and the major, funding round, in April 2021, ConsenSys raised $65 million from a total of 16 investors. The investor team included some of the prominent enterprise names, such as JP Morgan Chase, MakerDAO, MasterCard, and UBS.
What Is the Future for Quorum?
Quorum’s future looks quite promising. As blockchain technology gains wider use in the enterprise sphere, large private blockchains such as Quorum stand only to benefit.
The project is backed by some very prominent companies who act both as investors in Quorum as well as customers of it. Major companies that have adopted Quorum include Microsoft, HSBC, ING Group, LVMH, Novartis, to name a few.
Challenges to Quorum’s Growth
The only issue that might negatively affect Quorum’s growth in the enterprise arena is the presence of its fierce competitor Corda from R3. Both Quorum and Corda have specialized in the finance-related industries. So far, Corda has maintained a lead over Quorum in these sectors, and its dominant market position helps it keep a stranglehold on some of the most lucrative clients in the industry.
However, as the overall enterprise blockchain market is growing confidently, Quorum is unlikely to miss on growth opportunities, with or without the presence of Corda.
Quorum offers businesses a private high-performance blockchain that borrows some of the best features from its parent blockchain, Ethereum. These include Ethereum’s well-regarded security, code compatibility, and common token standards.
One of the key advantages of Quorum is the suite of enterprise apps that make complex blockchain development tasks very easy. Creating payment systems, setting up transaction privacy, or creating an entire blockchain network are no longer costly and lengthy processes when using Quorum’s set of enterprise apps.
As both the finance-related and other industries are increasingly adopting enterprise blockchain solutions, expect Quorum to be a frequent guest in the headlines of industry news.